Transport testing, simulation and measurement technology specialist AB Dynamics reported record revenue, order intake and EBITDA in its final results on Wednesday, despite a “challenging” operational backdrop.
The AIM-traded firm said market and customer activity levels remained positive throughout the 12 months ended 31 August which, together with a recovery of sales to China and a full year’s contribution from the acquisition of VadoTech, drove revenue growth of 23% to £80.3m.
Organic revenue was ahead 18%, against a prior year comparative in which the first half was impacted by Covid-19.
Track testing revenue was up 30%, which the board put down to increases in driving robots and advanced driver assistance system (ADAS) platforms following the recovery in customer activity, as well as growth in testing services from VadoTech.
Laboratory testing and simulation revenues were “similar” to the prior year, reflecting significant growth in simulation sales, offset by lower suspension parameter measurement machine (SPMM) revenues due to delivery timings.
As expected, the company said its adjusted operating margin reduced to 15.8% from 16.6%, driven by the investment in ABD Solutions to support strategic long-term growth drivers.
The operating margin across the core business increased to 17.5%, while EBITDA was ahead 21% at £16.4m and adjusted operating profit rose 18% to £12.7m.
AB Dynamics reported “significant” operating cash generation of £20.7m, up from £16m year-on-year, with cash conversion of 126%, leaving net cash at year-end of £29.2m, compared to £22.3m a year earlier.
That was after funding the final payment on the acquisition of VadoTech, and investing £3.8m in capital expenditure in the period, the board noted.0
It proposed a final dividend of 3.54p per share, making for a total dividend of 5.3p per share, up from 4.8p in the 2021 financial year.
The board said the increase reflected its confidence in the group’s financial position and prospects.
Looking ahead, AB Dynamics said momentum in the early part of the new financial period was “encouraging”, supported by a “solid order book” providing good visibility through the first half.
While mindful of ongoing supply chain disruption and wider economic uncertainty, the board said it was confident that the group would make further financial and strategic progress this year, with its expectations for the 2023 financial year unchanged.
Future growth prospects , meanwhile, remained supported by long-term structural and regulatory growth drivers in active safety, autonomous systems and the automation of vehicle applications, the directors added.
“The group has delivered an outstanding performance against a challenging market backdrop which includes the ongoing impacts of inflation and supply chain constraints,” said chief executive officer James Routh.
“The financial results show further strong progress, with record levels of order intake, revenue, adjusted EBITDA and cash generation.
“In parallel, the group has further strengthened in terms of strategic positioning through both organic investments and acquisitions and has now fully built out the senior leadership team and operating capabilities.”
Dr Routh said the firm saw “significant opportunity” in its core markets in automotive, supported by long-term structural and regulatory growth drivers, and was continuing to invest in new product development and technology.
“In addition, we are investing in new technologies to diversify the business into attractive adjacent markets through ABD Solutions.
“Our market drivers both in our core business and in ABD Solutions remain strong.
“Despite some potential short-term headwinds relating to global macroeconomic conditions, this backdrop, along with the group’s recent investments in capability and new products provides confidence of delivering continued progress in 2023 and beyond.”
At 1231 GMT, shares in AB Dynamics were down 2.97% at 1,550p.